Self-directed investing gets a bad rap. First of all, most of us are in that boat. And it’s not uncommon to feel as if you’re on your own against a sometimes panic-driven market. That’s natural, because unless you have major money under cover, you are on your own.

A recent Reuters review of the earnings footnotes from Bank of America revealed an interesting description of the bank’s Merrill Edge brokerage unit.

Associates in the Merrill Edge program, launched two years ago, are primarily based in bank branches and call centers targeting a less affluent, mass market audience with between $50,000 to $250,000 in investable assets — not wealthy enough to afford the personal attention of one of Merrill’s traditional full-service brokers.

Merrill brokers, however, are the primary revenue generators for the firm. Nearly 46 percent of the revenue received by Merrill Lynch’s Global Wealth Management unit last year, for example, came from just 21 percent of its top-producing brokers, about 2,500 people, according to copies of internal reports reviewed by Reuters in May.

Should you feel bad? Of course not. You should aspire to join the ranks of the truly rich. But it’s telling that the dollar figure most of us consider the high-end target — the pot of gold at the end of the rainbow — is in fact just scratching at the door of the major wealth management firms. If you aren’t starting out with $1 million, leave a message at the tone. Oh, and this line is being recorded for quality assurance and training purposes.

Not to badmouth Merrill or any other traditional broker, but there’s a reason they leave your money to the call center folks. If you control under $500,000 in savings today, chances are pretty high it’s locked up in a family business, in your 401k, or in a tax-deferred IRA. What do you need a broker for, much less a full-time wealth manager?

As a result, most investors buy help collectively, using mutual funds to manage their investments. Your need for fancy tax advice is limited, for now. You’re just not the target market.

It’s like any other business. Why chase hundreds of tiny accounts when you can land a big fish and eat for a month? Here’s an example: Realtors don’t want to do the work of selling 10 homes worth $100,000, face a gaggle of other real estate agents, then attend 10 separate closings. They want to sell one home worth $1 million, work that closing, and cash the commission check, simple as that. Who can blame them?

Self-directed investing can be done right

That makes most of us reluctant do-it-yourself investors. If you are locked into a corporate 401k, your options are limited and the fees high. Presumably, the limitations are to protect you, but that’s debatable. People do all kinds of dumb things inside their 401k accounts, like hold single stocks, even mostly their own firm’s shares.

If you run your own investments, say, through a self-directed IRA, then you truly are on your own. Yet there is good news: You can do this, and you can grow and protect your wealth at minimal cost using ETFs and index funds. The fact is, if you can get a decent accountant to help you manage the issues around income taxes, college savings, and planning for heirs, the actual investment advice for self-directed investing is pretty simple.

Here are three iron rules for the reluctant do-it-yourself investor:

1. Minimize your fees and taxes. It’s simple. Over the long term, what you pay to a broker or mutual fund eats away at your ability to grow wealth through compounding. The already rich avoid this by investing heavily in tax-free debt and other tools, but that only works if your major aim is wealth protection. If you need growth, then a lopsided bond concentration is a poor strategy.

2. Do not trade. Aside from mutual fund management fees, trading in and out of positions slowly but surely erodes your return, thanks to the commissions you pay. Buying an ETF helps you avoid the costs of owning a broad selection of stocks, but only if you also avoid the temptation of trying to time your way in and out of the market. Any short-term wins will, soon enough, be demolished by one big loss. It’s inevitable.

3. Rebalance periodically. The only way to really get ahead with self-directed investing is to decide in advance your asset allocation and rebalance to those proportions like clockwork. That way, you sell high and buy low, emotion-free (or nearly so). Time and again, finance research has proven the effectiveness of the rebalancing strategy. It isn’t exciting. But, far too often, exciting investments end in tears.

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